A 50- Year Project Has a Cost of $500,000 and Has

question 267

Multiple Choice

A 50- year project has a cost of $500,000 and has annual cash flows of $100,000 in years 1-25, and $200,000 in years 26-50. The company's required rate is 8%. Given this information, calculate the payback of the project.

• A) 7 years
• B) 6 years
• C) 5 years
• D) 4 years
• E) 3 years

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Definitions:

Annual

Occurring once every year.

Absolute Value

The distance of a number from zero on the number line, without considering direction; always non-negative.

Solution

The number or collection of numbers that fulfill a given equation, inequality, or a set of equations.